"Wally" <wallyxj2[at]hotmail.com> wrote:

- quote -

Seems pretty straight forward to me - half of the gain is
from the sale of personal residence and may qualify for the
exclusion and half of the sale is from a trade or business
property which is NOT excludable and which will have some
depreciation recapture.

Gene E. Utterback, EA

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wallyxj2[at]hotmail.com (Wally) writes:

- quote -

If the gain on the personal residence does not exceed
$250,000 ($500,000 if married filing jointly), there is no
tax on that portion of the sale. The percentage of the
whole, used as a rental property, is reported on Form 4797.
Depending on basis, there could be a goodly sum due in tax
unless offset by more recent (extensive) capital
improvements. Depending on what the new owner does with the
property, mortgage interest, taxes, etc. would be assigned
to the designated purposes. Real Estate on Shedule E and
personal residence on Schedule A. Your description doesn't
seem to apply to an "installment sale". The purchaser is
buying the property outright. The seller is holding the
mortgage. There could be "closely related", and other
issues, which I have not researched/addressed. I'd expect
the person should really consult a professional (before
completing the transaction). It may not be a very good idea
for the sale to take place at all, at all!!!=

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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From the tax reporting standpoint, how does one handle an
installment sale of a 2 unit owner occupied apartment
building?

The owner lived in one of the units for 25 years and has
reported rental income on the other. The building was owned
free and clear. The building was sold to the son of the
owner at fair market value using a land contract installment
sale. The owner is financing the sale by giving the buyer a
30 year mortgage.

I would appreciate any advice.

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